With the advent, prevalence and continuing development and adoption of electronic storage, databases and electronic media-implemented data collecting and processing, companies have increasingly relied on software/computer-based systems to bring about greater efficiency, automation and capacity in conducting business operations. Further, such technology is increasingly relied upon by businesses in handling compliance, tax reporting and other tasks. To more fully integrate technology with a company's workforce, software-based systems exist that include workflow processes to insure compliance issues are addressed in business operation. The workflows involve handling and presenting data to workers via computer-based workstations.
For large corporations, including those often referred to as “multinational corporations,” that have operations spread out across many countries, continents, regions and related taxing authorities, it has long been a difficult task of managing, and responding timely to, operational matters such as tax reporting. This is especially true where sales, income, asset location, etc. must be allocated across such jurisdictions and must be estimated and continually revised over time as underlying sales, revenues, etc. data is finalized. It has long been important for companies in this situation to maintain reliable records supporting calculations and resulting inputs reported in such tax filings. A “paper-trail” is often difficult in the electronic domain where multiple users often remote from one another and within different operations locations are accessing, revising and writing-over underlying data. Such “versioning” of data and underlying processes associated with reporting are important aspects in a tax department's operations.
Financial scandals in the corporate world have resulted in heightened scrutiny of corporate tax departments by regulators and auditors. Companies are now learning that the level of efficiency with which the corporate tax department operates can significantly affect the accuracy of compliance reporting, which may impact a company's financial statements (for example, in the case of the FAS 109 tax provisions that shows up on the financial statement). In today's environment under tighter controls associated with recent financial legislation and regulation, e.g., the Sarbanes-Oxley Act and related compliance regulation, a company's internal controls and procedures are under the magnifying glass more than ever, giving tax accountants—from staff level to VP and CFO levels—much more to deal with in terms of responsibility and even personal liability. Compliance pressures and the need to respond swiftly and accurately to regulators are important considerations and are spurring corporate investment in IT and computer/software-based systems to oversee and track issues and assist in reporting. In the past, cost, maintenance and customization requirements for most solutions were significant barriers.
More recently, solutions have been designed specifically for corporate tax departments to integrate with tax software, including Internet-based solutions, and capable of providing a document management function. Tax departments are continually gathering, creating, editing, and routing documents throughout the organization. As companies expand and change, the process of tracking different versions of work papers, checklists, returns and other documents, as well as the underlying data, computations and formulas, becomes more and more arduous. This is especially difficult with multinational corporations having operations, facilities, branches, subsidiaries and other related entities spread out across disparate locations and jurisdictions as well as operations that involve a multiplicity of tax authorities. With a workflow and document management solution designed specifically for tax departments, employees are better able to organize, track, retrieve and manage all documentation, as well as review steps, in one easy to use system.
With the increasing importance of tax departments to the financial health of any organization, many corporations are taking considerable measures to implement workflow systems designed to both create efficiencies and protect the reputation of their business, through controlled and standardized processes. Tax departments have a wide array of responsibilities that are all tied to the financial health of an organization. Compliance responsibilities that have very specific due dates must be completed accurately and on time, or the organization may suffer penalties and fines. Improper planning or poor data gathering can result in errors that, in some cases, will impact a financial statement and even share price. Overburdened tax departments spend much of their time just getting the work done, and don't have enough resources to properly strategize on how to lower overall tax rates and impact their organization. With all this said, the entire process—especially for larger organizations with multiple offices around the globe—can be extremely difficult to manage. As a result, CFOs, Senior VPs of Tax, and VPs of Tax, are now looking for new ways to manage workflow, monitor projects, collaborate, gather data (i.e. tax packages, Schedule M (Form 990), tax adjustments, etc.) and track due dates—tasks typically completed manually through spreadsheets, databases or physical paperwork.
As a matter of importance with a tax department, tax events within a large organization often must be spread or allocated across the organization and must be estimated for periodic reporting. Often the reporting must be followed up with end-of period reporting that requires previously submitted data to be revised. In the event a report or filing submitted by a tax-paying entity is challenged by a taxing authority, then the entity must provide documentation to support its earlier filings and establish a reasonable basis for reporting the previously submitted data. Staff within organizations often prefer to use familiar programs and documents for gathering and inputting and processing data, such as Excel spreadsheet. Staff from operations from many jurisdictions may jointly input, access, revise and process the data. Workflow processes and systems may be used to route workflow steps to various staff in the data collection and tax reporting process. This may include “routing” flows that call upon multiple individuals to access, revise and otherwise manipulate a common spreadsheet. There is often overlap in the workflow processes that result in multiple persons accessing and revising the core spreadsheet. Because multiple users have access to a common spreadsheet and the data on that spreadsheet, as well as the underlying formulas and processes used in the spreadsheet to perform calculations related to the reporting of tax information, it is often impossible to go back in time and recreate, with any degree of certainty, the exact version of the document as it was used to generate the interim tax filing. This presents a compliance problem for many companies and leaves them susceptible to fines and penalties imposed by taxing authorities.
What is needed is a system that addresses the above mentioned problems and provides companies with a solution that provides staff and users with the comfort and familiarity of using Excel or similar such spreadsheet in inputting, revising, and updating data, while providing a more robust data storage and maintenance system that may be called upon to provide effective back-up documentation in the event of challenge or audit.